The Scottish Government said on Thursday that the Scottish Funding Council is to “consider its model in light of Covid-19” and warned that Scots universities are facing deficits of between £383 million and £651 million in academic year of 2020-21 alone.

“Ministers have commissioned work on the future provision and sustainability of colleges and universities in light of coronavirus (Covid-19),” said the Scottish Government.

“The Scottish Funding Council (SFC) will review the provision and delivery of teaching and research activity across the college and university sector, as well as how activity will be funded.”

An SFC paper published in April showed that universities face operating deficits of between £383 million and £651 million in academic year 2020-21 alone, while “the college sector faces significant challenges as a result of loss in income and increased costs.”

Richard Lochhead, Minister for Further Education, Higher Education and Science, said: “Our colleges and universities are showing tremendous adaptability and ingenuity in meeting the challenges of Covid-19, yet we know the financial impact could run to hundreds of millions of pounds in lost income.

“Further and higher education and the research sector must emerge from this crisis even stronger by being at the heart of our economic recovery, delivering on our skills needs and maintaining its world leading reputation.

“I am clear we will need to shift to meet those challenges, so the Scottish Funding Council will look at how its existing models of funding, governance and delivery can exploit new opportunities and continue to support our world class further and higher education systems.”

Scottish Funding Council Chair Mike Cantlay said: “COVID-19 has created significant challenges for learners, colleges and universities.

“More broadly, the current crisis will create long-term changes in the Scottish economy and the way we live our lives. 

“We will be considering what this means for the way we fund and support tertiary education and research to continue to deliver the outcomes we need for Scotland and beyond.

“We look forward to working with partners and stakeholders throughout this process and in this fast-changing environment.”

The review will consider the changes needed to existing funding, operations and accountability frameworks in order to respond effectively to new challenges.

It will provide advice, where appropriate, to Ministers on relevant changes to policy funding for tertiary education and research.

Ministers have asked SFC to provide its initial considerations by August.